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Department of Labor Proposal on Definition of “Fiduciary”

September 26, 2012
On February 3, 2011, CFP Board submitted a comment letter (Missing PDF) to the Department of Labor (DOL) regarding the agency’s proposed definition of the term “fiduciary.” CFP Board commended the agency for taking steps to enhance protections for plan participants and beneficiaries, expressing support for adoption of the Department’s proposal, and stating CFP Board’s belief that fiduciary status is appropriate for investment professionals under ERISA. CFP Board noted that the effect of being deemed a fiduciary under ERISA is different from that of being deemed a fiduciary under the Advisers Act and suggested that it may be appropriate and desirable to revisit the prohibited transactions provisions as they apply to particular relationships. CFP Board also urged the DOL to limit the scope of the “adverse interests” exception to the proposed definition to clarify that an adviser may not simply “opt out” of ERISA’s fiduciary status by disclaiming any intention to provide impartial investment advice, suggesting that the DOL expand the class of persons and plans to whom investment professionals may provide “investment education” without assuming fiduciary status to include plan sponsors and administrators, defined benefit plans, and individual retirement accounts (IRAs).